Reserve Bank of Australia Financial Stability Review:
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US tariff uncertainty poses substantial headwinds to global growth.
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Tariffs could have a chilling effect on business investment and consumer spending.
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Risk of disorderly correction in global asset prices, putting pressure on non-bank lenders.
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Hedge funds particularly vulnerable to repricing of risk due to highly leveraged positions.
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US tariffs on China may necessitate further policy stimulus from Beijing.
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Global slowdown, particularly in China, could spill over into Australia.
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Risk aversion could increase financing costs and cause liquidity strains.
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Australian financial system well placed in the event of a severe global downturn.
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Strong financial position of most households and banks limits the risk of widespread disruption.
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Australian banks well capitalised and able to absorb large loan losses.
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Important that bank lending standards remain sound and are not relaxed.
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Budget pressures pervasive across Australian households, but expected to ease a little.
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Wary that lower interest rates could encourage households to take on excessive debt.
This report would have been written well before Trump’s announcements a few hours ago. Pretty spot on.
This article was written by Eamonn Sheridan at www.forexlive.com.